Covid-19 triggers switch from ‘full load’ to ‘less than full load’ transportation.

Much of my writing is right here in the TJO Cargo blog.  But I do share and originate pieces in LinkedIn Pulse.  I looked in my LinkedIn Pulse article archive. Even with articles I removed to use in my books, ‘Biznanigans’ and ‘The Cargo Nerd’s Bathroom Companion’ being sold on Amazon, I realized I still had ninety-nine articles in my LinkedIn Pulse line up. Being impatient to hit the ‘one hundredth’ milestone, I sat down in front of a blank Word doc and committed to crafting number one hundred.

I pondered what to write about. On August 4th, 2020 I wrote about what the recovery will look like for the near future. Before that, I did a piece on Word Oceans Day and pollutants in the ocean. Way back in May 2020 I looked at the cargo outlook and the impacts of Covid-19. Before that I wrote about the freight cliff truckers hit, tech weakness in the supply chain, port congestion, and the subjects go on and on. With ninety-nine of them, I cannot mention them all.

For the one hundredth article I thought I should get back to my roots; supply chain risk mitigation and how it relates to cargo insurance. Those two subjects are what make me a living and allows me to sit and write and say with conviction, ‘I am working’. 

This point in history is a good time to look at risk anew. Saying things have changed over the past seven months would be an understatement. The Covid-19 pandemic has created a situation of supply chain leaders being reactive instead of proactive. Pre-Covid, it was easier to be proactive because the environment was stable and variables were known. Now the supply chain does not know what next week will bring with it.

One of the most apparent reactive changes seen in the market has to do with mode of transport. What was shipped truckload ground transport or ocean full container, may now be shipped less than truck load (LTL) and less than container load (LCL). Inventory managers can benefit from LTL/LCL, even at a higher per unit transport rate, because they can keep smaller amounts of inventory on hand. Typically, good capacity of LTL trucks makes it much easier to have more, but smaller, shipments to avoid over stock. For ocean LCL’s part, there are plenty of cargo consolidators who would be willing to hold inventory within reason and ship as needed. Given good pricing, there is not a lot wrong with hiding a little inventory in the transportation pipeline. Pre-pandemic buyers could better forecast how inventory would keep up with demand. Today it is much more difficult to estimate how next month’s sales will be.

The first risk elevation I see is LTL/LCL presents a higher risk of damage than truckload/FCL transportation. Companies switching to LTL/LCL should consider the rigors of less than full load transportation are higher than full load. With full load transport, most often, when truck/container doors close at the supplier, the cargo seldom sees the light of day again until the buyer reopens the doors. With LTL/LCL the cargo can be loaded and unloaded multiple times before it reaches the consignee. In addition to the consolidation/deconsolidation transloads for ocean LCL, the longer the LTL ground inland transport distance, the more often the cargo is cross-docked.

Another risk inflator for LTL/LCL is the shapes and sizes of less than full load cargo which creates a higher incidence of movement of cargo in transit. Remember, LCL/LTL is a collection of many different shippers freight, all packaged differently. Do not believe me? Go to the dock before the LTL truck that picked up your freight closes the trailer door and look inside. You will not see uniform cubes of cargo all snuggly holding each other in place with load-lock bringing up the rear. You will see cargo of varying shapes and sizes sitting in the best place the driver could find to put it. Personally, I think the drivers do exceptionally well considering what they must work with. But even the best of them, will have freight move in transit which can cause damage.

When switching from full load to less than full load supply chain managers should not just make the switch. The modes of transport, while similar, are not the same. Packing that worked well for full load, may not preform in a less than full load environment. Uniform cartons palletized with shrink wrap do well for many truckloads. In the case of LTL/LCL, you better get a wood frame pallet topper and the banding machine out. You need a good tough cube to best protect your freight in an LTL environment.  Strength and load capacity of pallets must also be addressed. What survived a door to door full load transit may not survive being handled as much as LTL/LCL cargo is. If a pallet fails, transloading personnel often will not take the time nor expense of transferring your cargo from one failing pallet to a replacement pallet. It is more likely they will get the fork-truck and scrape your mangled pallet off the floor and reload to the next truck making it the next person’s problem.  

When a full load leaves the door, it is not likely you will’ lose’ one pallet. When a less than full load leaves the door, the risk of loss of a partial portion of the shipment increases. Shippers turning to LTL/LCL should refocus on labeling each pallet with highly visible labeling. The label should at minimum include the bill of lading number, the complete shipper information, the complete consignee information, all in writing and barcode where appropriate. In addition, do not neglect to add the piece count as well in ‘one of’ terms. If there are five pallets, one of five, two of five, three of five, and so on. It helps to keep your freight together in staging areas. And for crying outload, do not depend on the sticky paper or tape to hold the label to the outside of the pallet. Busy warehouse floors will be the resting place of the label if you do. Make them big, loud, clear, and incorporate them into the shrink wrap. 

If you are shipping a commodity that would be attractive to steal, leave the commodity description part off the outside of your packaging and outer pallets. In full load transport theft is of course possible, in less than full load, it increases the risk of a ‘crime of opportunity’. While a would be thief may not knife every carton they see to look for things they would want to steal, they would be attracted to cartons or pallets that say ‘Dell Computers’, ‘Coach Bags’, ‘Tom Ford Fashion’, or similar. If you, or someone you know, would be delighted to find a good deal on it on the secondary sales market (flea market, social media, online classifieds), than a thief will be delighted to find it on a deserted warehouse floor. Do not advertise it. On a cross country LTL trip there will be plenty of eyeballs looking at your freight. Do not give them eye candy. 

The next thing to consider is the carrier may not service cross country destinations themselves but will accept your freight to those destinations. This does not apply to all LTL carriers but does exist. Some LTL carriers with cross country service, do not always execute the service on their own trucks. The term ‘partner carriers’ will be thrown around if the subject comes up. Some use partner carriers to get across stretches of the country they do not have terminals; others will hand off the freight to local partner carriers for local delivery. It is not my intension to demonize carriers who use partner carriers. But you, as the transportation consumer, have the right to know when partner carriers are used and who they are. 

Okay, you have done everything right for your LCL/LTL shipment. The packing is making your freight a cube fortress, the pallet application is spot on and in good condition, the pallet labels can be seen from Mars and contain every bit of information needed, and the pallets are numbered ‘one of’ on all sides plus the top and the bottom for good measure. You have created the Fort Knox of cargo protection and have even hired Dwayne ‘The Rock’ Johnson to watch your freight during transloading. 

Despite the best loss mitigation practices used… ever, inexplicably there is an LTL cargo loss. ‘The Rock’ went on a fifteen-minute break to sign autographs and things went down the toilet quick. What do you do now? Call the carrier, file a claim, and after process, you receive claim settlement, right? Sorry, that is only with truckload transport by a contract carrier with cargo insurance. LTL carriers, which are common carriers, do not take full cargo liability. They do however take a ‘by the pound’ cargo liability which would work sort of, kind of, maybe okay, if your commodity is uber heavy and super cheap. For other kinds of cargo, which is just about all of it, the cargo liability will not come near making you whole. If you normally ship truckload by contract carrier, remember to think about cargo insurance. You have two choices with ground LTL. First, buy cargo insurance from someone like TJO Cargo to cover your shipments, or second, use a 3PL provider who provides, and guarantees, 100% cargo liability regardless of cause of loss from the ground up. If you ship ocean, there is little, if any, cargo insurance whether FCL or LCL. There isn’t much choice but to purchase cargo cover if you wish to mitigate risk.  

Remember, there is no law that states you must purchase cargo insurance. Cargo insurance is not about what you can afford to lose. Cargo insurance is about what you can afford to lose at any given time. Similar to your home and its insurance, even if you can afford to replace it and have no lien, do you want to dig that deep in the event of a loss? If you cannot afford, or choose not to, lose the value of your shipment, insure it.

There you go. Number one hundred is in the books.